Fraud Alert or Credit Freeze – Which is Right for You?

Considering a fraud alert or credit freeze? In the aftermath of the Equifax data breach, many people are. You don’t need to be an identity theft victim to use them – but it’s helpful to consider your situation. If you’re not sure which is best for you, here are some things to think about.

What do fraud alerts and credit freezes do? With a fraud alert, businesses must try to verify your identity before extending new credit. Usually that means calling to check if you’re at a particular store attempting to take out new credit. With a credit freeze, no one – including you – can access your credit report to open new accounts. You’ll get a PIN number to use each time you want to freeze and unfreeze your account to apply for new credit.

How long do fraud alerts and credit freezes last? A fraud alert lasts for 90 days. You can renew it but you’ll need to remind yourself or it will expire automatically. Identity theft victims are entitled to an extended fraud alert, which last seven years. In almost all states, a credit freeze lasts until you temporarily lift or permanently remove it. In a few states, it expires after seven years.

How much do they cost? Fraud alerts are free.Credit freezes may involve fees, based on state law. In most states, they’re free for identity theft victims. For non-victims, they cost about $5 to $10 each time you freeze or unfreeze your account with each credit reporting agency.

How do I place a fraud alert or credit freeze? To place a fraud alert, contact any one of the three major credit reporting agencies, either by phone or online. The one you contact is required to notify the other two. If you’re an identity theft victim placing an extended fraud alert, you’ll also need to mail or upload your Identity Theft Report which you can create at IdentityTheft.gov. To place a credit freeze, you must contact each of the three credit reporting agencies individually at their credit freeze portals.

How does this all add up? Credit freezes may be a strong tool but they may not be for everyone. Consider the cost and hassle factor. If you’re about to take out new credit (apply for a mortgage, car loan, student loan), then you’ll have to unfreeze and refreeze each time you want new credit. But if you won’t need new credit soon, then a credit freeze may be for you.